I did a bit of a deep dive on the unemployment data. I learnt three things.
We’ve had a bit of time to look at the latest employment data now, and there’s a few things that we’re learning.
- The unemployment rate is steady, but only on a collapse in the number of people participating in the job market.
- There’s no “pink recession” – the male labour market is performing worse than the female one.
- A lot of the ugliness that’s in the job-market below the surface is largely thanks to Victoria, so it will hopefully pass soon as we (hopefully) exit lockdown.
So the headline unemployment rate was actually pretty good in the September results.
But this is largely because of the way the unemployment rate constructed. The unemployment rate is a percentage – the number of unemployed people participating in the labour market as a percent of the total number of people participating in the labour market.
But it’s participation that’s key. If you’ve got a job, you’re obviously participating. But if you don’t have a job, you need to be actively looking for work, or you’re not counted as participating.
And so if you lost your job, and then just decided to give yourself a month off before starting to look for work in earnest, then you’re not officially counted as unemployed.
And that’s why Victoria – where the number of employed people fell a huge 1.1%, had the same unemployment rate as WA, where employment is actually growing. They both posted a pretty decent rate of 6.7%.
But it was all because the participation rate in Victoria collapsed, as unemployed people just stayed on the side-lines.
And it was that collapse in Victoria that brought down the national participation rate, which in turn held down the national unemployment rate.
You can see the collapse and partial rebound in participation here:
Now there was also a lot of talk about the ‘pink recession’, but we’re not seeing that in the data.
Female unemployment, at 6.7%, is now lower than male unemployment of 7.1%.
Both male and female participation rates fell by 0.1%, but men lost more jobs than women.
As a result, we now have more unemployed men than women.
That’s not to say that it’s an easy job market for women, or that there aren’t existing structural inequalities in the job market.
However, there’s a claim doing the rounds that this crisis has been tougher on women than men. It doesn’t seem to be entirely true, and I’m not sure that it’s that helpful.
Finally, when you cut through the definitional issues, you can get a pretty clear read from the hours worked data.
That shows that the labour market is recovering in most states, with Victoria being the clear exception:
Typically hours worked recovers ahead of employment, as companies work existing workers more before hiring new ones, so this shows that the labour market is clearly recovering.
However, Victoria is still struggling under the weight of lockdowns.
Now that they (touch wood) are ending, that should mean that we can expect the labour market to recover from here, and potentially by year’s end, on the chart above, we should have hopefully regained all of the losses since Covid started.
And that, all things considered, is a pretty good result.